Legal Question in Business Law in California

Re: Business sale.

Oral agreements are, with a few exceptions, every bit as enforceable as are written contracts. The difference is that oral agreements are harder to prove. If your friend denies the existence of the oral contract or contends that the terms are different than you think they are, then, without any writing, it's a matter of who the Judge will believe. No lawyer can tell you the answer to that in advance, although one may be able to guess at the odds after hearing all of the details.

You don't say whether your friend now doesn't want to buy the business, or wants to keep the business but not pay the other $5,000. Or, is it that your friend has an affirmative claim against you, perhaps based on alleged misrepresentations by you about the business? Without this and a great deal other information, there's no way to tell how this case would look in court. However, since it's about $5,000, you can do it in small claims court, which is fast, cheap and no lawyers are allowed.

Re: Business sale.

I agree with Mr. Genser, and would like to add a couple thoughts. While the basic agreement may not be in writing, there is no doubt some written evidence that a contract exists. For example, the $5,000 deposit would perhaps be evidenced by a check signed by him and endorsed by you, possibly bearing a notation as to what it was for. There is likely to be other evidence such as notifications to suppliers and customers. If you have to sue you shouldthink about what evidence might exist and how you can pull it together. You should also contact potential witnesses. There are probably people including the buyer's friends who could testify that the price was $10K.